The document outlines seven major Russian coking coal development projects that will provide almost 80 million tonnes of new annual production capacity by 2020 to supply Russian steelmakers and export markets in Asia, and argues that while increased competition is possible, lack of infrastructure means Mongolian and Russian coal production will likely co-exist targeting different markets due to transportation challenges.

1. Slide 1
Russian Coking Coal Developments
and Leading Mongolian Operations
– Competition or Co-Existence
Presented by
John P L Bacharach, Director, IMC Montan, Moscow
23/24 May 2012

2. Slide 2
The Projects

3. Slide 3
The Projects (2)

4. Slide 4
Apsatskoye
 Name of Project: Apsatskoye
 Developer: Arctic Developments/SUEK
 Location: Near Chara, Chita Region
 Coal Types: Coking and thermal
 Reserves: About 425mt

5. Slide 5
Apsatskoye (2)
 Mining Method: Surface and underground
 Planned Full Capacity: 6.8mtpa
 Approximate Capex: $1.0bln
 Rail Connection: Short
 Target Markets: China

6. Slide 6
Elegest
 Name of Project: Elegest
 Developer: Russian Copper Company
 Location: Near Kyzyl, Tyva Republic
 Coal Type: Coking
 Reserves: About 400mt

7. Slide 7
Elegest (2)
 Mining Method: Underground
 Planned Full Capacity: 18mtpa
 Approximate Capex: $1.8bln
 Rail Connection: 430km
 Target Markets: Russia 6-10mt, Export 8-
12mt

8. Slide 8
Elga
 Project Name: Elga
 Developer: Mechel Mining
 Location: 370km west of Nerungri, Sakha
Republic
 Coal Types: Coking and thermal
 Reserves: About 2.0bln t

9. Slide 9
Elga (2)
 Mining Method: Open Pit
 Planned Full Capacity: 27mtpa
 Approximate Capex: $3.0bln
 Rail Connection: 315km
 Target Markets: Asia Pacific

10. Slide 10
Mezhegeiskoye
 Name of Project: Mezhegeiskoye
 Developer: Evraz Group
 Location: Near Kyzyl, Tyva Republic
 Coal Type: Coking
 Reserves: About 210mt (Mezhegeiskoye)
and 580mt (Vostochny)

11. Slide 11
Mezhegeiskoye (2)
 Mining Method: Underground
 Planned Full Capacity: 7-12mt
 Approximate Capex: $1.5bln
 Rail Connection: As Elegest
 Target Markets: Asia Pacific

12. Slide 12
Ulug-Khem
 Name of Project: Ulug-Khem, Central Area
 Developer: Severstal
 Location: Near Kyzyl, Tyva Republic
 Coal Type: Coking
 Reserves: About 630mt – Central Area

13. Slide 13
Ulug-Khem (2)
 Mining Method: Open Pit
 Planned Full Capacity: 12.5mt
 Approximate Capex: $3.0bln
 Rail Connection: As Elegest
 Target Markets: Asia Pacific

14. Slide 14
Usinskoye 1
 Name of Project: Usinskoye 1
 Developer: Severstal
 Location: Vorkuta, Komi
 Coal Types: Coking
 Reserves: 620mt

15. Slide 15
Usinskoye 1 (2)
 Mining Method: Underground
 Planned Full Capacity: 4.0mt
 Approximate Capex: $1bln
 Rail Connection: 30km to existing
 Target Markets: Russian Steel Plants

16. Slide 16
Usinskoye 3
 Name of Project: Usinskoye 3
 Developer: NLMK
 Location: Vorkuta, Komi
 Coal Types: Coking
 Reserves: 227mt

17. Slide 17
Usinskoye 3 (2)
 Mining Method: Underground
 Planned Full Capacity: 4.5mt
 Approximate Capex: $1.5bln
 Rail Connection: 3km from existing
 Target Markets: Russian Steel Plants

18. Slide 18
Indicative Production Capacity in
2020 (mtpa)
Apsatskoya 6.8
Elegest 18.0
Elga 24.0
Mezhegeiskoye 9.0
Ulug-Khem 12.5
Usinskoye 1 4.0
Usinskoye 3 4.5
TOTAL 78.8

19. Slide 19
Summary
 These seven developments will provide:
Almost 80mtpa of new production capacity
Secure supply of coking coal for Russian steel
makers
Big increase in coking coal supplies (and
some in thermal)
Massive pressure on rail and port capacity

20. Slide 20
Competition or Co-Existence
 Much of Russian new production will be used in
Russian steel plants
 Any surplus will be exported through Far East
ports
 Majority of Mongolian production likely to go to
China
 Lack of infrastructure mitigates against
Mongolian coal going to Russia or Russian coal
to China
 Most likely outcome is co-existence!

21. Slide 21
Contact
John P L Bacharach
Director
IMC Montan
Chayanova 22, Block 4
Moscow 125047
Russia
Tel: +7 499 250 6717
Fax: +7 499 251 5962
E-mail: consulting@imcgroup.ru